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The Continental System - The united states confronts economic warfare

The Rambouillet Decree underscored the cruel position in which the wars
of the French Revolution and the continental system placed the United
States. Articulation of the continental system, however, merely
sharpened a major question confronting the United States since 1793:
Would Britain or France become the primary benefactor of American trade?
Federalist administrations essentially had answered that question
through negotiating Jay's Treaty (1794) with Britain, but
American ratification of this treaty contributed to the Quasi-War with
France between 1798 and 1800. The war led to internal unrest, the
eclipse of the Federalist Party, a widespread assault upon the civil
liberties of dissenters, and a national hope that such a war would not
again be necessary.

During the four years prior to enunciation of the continental system,
and the responsive British measures, American commerce prospered
remarkably. British, continental, West Indian, and South American
markets all contributed their share to this era of great commercial
prosperity. It was President Thomas Jefferson's and Secretary of
State James Madison's mistake to believe that this lucrative
interlude could and should continue. Nor did many American merchants
seem to grasp fully that the continuing flow of trade and relatively
open markets remained entirely at the discretion of the belligerents.
When the belligerents began to announce their regulations concerning
neutral trade, many Americans reacted with shock, indignation, and a
determination that the measures be repealed or modified.

Jefferson and Madison's perspective on how to resist the
continental system and related British measures is complex and
interesting. Both were sympathetic to the larger purposes of the French
Revolution yet distressed by the rise of Napoleon Bonaparte and his bold
aggressions against those nations resisting his program of conquest.
However, both wished to keep their indignation within bounds, partly
because they fervently hoped to persuade Bonaparte to help the United
States deprive Spain of the Floridas at some opportune moment. Also,
they struggled to keep some perspective on Napoleon; in essence, they
viewed him as scum temporarily floating on the beneficial and permanent
wave of the French Revolution. They believed that such a person should
not be allowed to disrupt permanently the spirit of American and French
comradeship arising out of their revolutions, so close in time and in
their larger purposes.

In addition, Jefferson and Madison shared with Bonaparte the view that
Britain was the greatest enemy of their respective nations. After all,
they reasoned, Britain seized American sailors and forced them into
naval service (impressment), in effect denying many Americans their
right to life and liberty. Quite clearly, Britain remained the major
culprit on the maritime trade issues, because it exercised effective
naval power in regulating American trade while Bonaparte had power only
to harass the trade lanes with commerce destroyers or to close
continental ports to American trade. Finally, Britain continued to
demonstrate contempt for the U.S. government by its ongoing intrigue
with Native Americans in the Northwest Territory.

The historian Paul Varg has emphasized Jefferson and Madison's
conviction that their infant nation should do its best to establish the
rights of small naval powers. Since 1776, in fact, Americans had worked
to expand the rights of neutral powers. Terms of the model treaty of
1776, the Treaty of Amity and Commerce with France in 1778, a commercial
treaty with the Netherlands in 1780, Jay's Treaty in 1794,
Pinckney's Treaty of 1795, and the Convention of 1800 with France
all reflected America's intense concern to defend or expand
neutral rights. Although Napoleon's trade restrictions were
painful, the most bitter disappointments in defending neutral rights had
occurred with the British, particularly with Jay's Treaty. A
certain principled rigidity therefore operated in American-British
diplomacy that was not active in defining the American-French
relationship.

As they contemplated measures to counter the economic systems
established by France's continental system and a series of
British orders in council, Jefferson and Madison, his successor, were
confronted by a puzzling domestic situation. Jefferson in particular was
regarded by fanatical New England Federalists as a devotee of everything
French and a tool of Napoleon. Federalist merchants presumed his
persistent hostility to Britain and to the advancement of American
trade, though on the latter point they were very mistaken. The belief
that Jefferson and Madison acted from partisan motives when dealing with
both Britain and France became especially troubling when such views were
held precisely by those who would be severely affected if the United
States pursued a course of economic retaliation. Another complicating
factor arose because these same Federalist merchants expressed
willingness to endure most maritime hardships imposed by Britain,
including a system of licensed trade, mainly because such conformance
guaranteed the continuance of their trade and profits. They also shared
Britain's horror of Napoleon and the French Revolution that had
spawned him. The fact that these merchant-Federalists were largely
located in New England also raised Jeffersonian anxiety that coercive
commercial measures might be interpreted as politically inspired
punishment for the one geographical section having continuing Federalist
strength.

Thus, whatever policy or series of policies Jefferson and Congress
adopted in reaction to the continental system or to British measures,
certain difficulties lay ahead. Submission to foreign commercial
regulations would disturb militant patriots and those who believed
neutral rights should be defended on principle; resistance promised to
alienate both merchants and agriculturalists with a vested economic or
political interest in continued trade. It is therefore interesting to
note how decisively Jefferson eventually pressed for an embargo, a
measure certain to have profound internal consequences. Jefferson and
Madison, however, were intellectual cousins to Bonaparte and to British
statesmen in believing that severe economic measures were likely to
bring offending nations to reason. In this sense the continental system,
the British orders in council, and the embargo (with subsequent American
commercial laws) were all grounded in common postulates about the
persuasive power of protective economic measures. As events turned out,
only the American economic measures had their desired impact, but even
repeal of the offending British orders in council came too late to
prevent war between the United States and Britain in 1812.

Neither Britain nor France fully grasped Republican anger concerning
their economic measures because they did not fully understand the
principled, lengthy stand of Republicans for unfettered free trade. As
Drew R. McCoy has shown, Republicans committed early to expanding
America's commerce as a means to develop a citizenry that would
be industriously and usefully employed. In such conditions, a virtuous
citizenry would develop, equipped to support the ideals of republican
government. At the same time, free markets must contribute to happiness
and prosperity abroad and thus lead to a more humane and peaceful world.
Clearly, when France and Britain destroyed the free exchange of trade,
causing unemployment and disruption, they were attacking not only
America's direct economic interests but sabotaging one basis of
building a sound republic and an enlightened world.

Jefferson's embargo policy provoked consternation in Britain and
New England, primarily because of the hardships it imposed on
Anglo-American trade. But it also aroused deep anger because it appeared
intended to complement Napoleon's continental system. Since the
United States was not free to trade with France, given British control
of the high seas, an American self-blockade seemed obviously designed to
injure Britain. Jefferson's immediate objective, however, was not
to aid Napoleon but through withdrawal of American trade to avoid war
and to persuade Britain to modify its offensive trade regulations. If
the chief culprit, Britain, modified its regulations, Jefferson and
Madison felt confident that Napoleon would likewise be forced to
ameliorate the continental system. Such a modification must in turn
attract American trade to the Continent and to French colonies in the
Caribbean. Jefferson, not a pacifist, continued to consider the
possibility of war, though he met resistance to that idea within his own
cabinet and circle of supporters.

American domestic pressures against the embargo eventually became so
severe that Congress moved toward repeal in the last days of
Jefferson's presidency. Pressures came from many directions, some
anticipated and some not. Jefferson's support began to erode
within his own party; this circumstance reflected the difficulties of
enforcing embargo measures at the state level, even where the governors
were Republicans and supporters of the administration. Madison's
succeeding administration, together with a wavering and troubled
Congress, never subsequently crafted a series of measures to persuade
France and Britain to ameliorate significantly their virtual warfare on
neutral trade. The Non-Intercourse Act (1809), which became effective
three days before Madison entered office, proved to be an embargo
measure with a difference: commerce was restored with every nation
except France and Britain, but provision was made that trade with those
nations would be resumed as soon as they repealed their noxious decrees
and orders.

When this measure proved unavailing, Macon's Bill Number 2 was
enacted in May 1810. This mischievous law reopened trade with France and
Britain but provided that should either nation repeal its restrictive
commercial measures, trade with the other power would be interdicted.
Napoleon, who had learned about repeal of the embargo, saw an
opportunity to stop American trade with Britain once again. He therefore
informed Madison that as of 1 November 1810, he was conditionally
revoking his Berlin and Milan decrees pertinent to American trade and
called upon the United States to invoke noninter-course against Britain.
Madison understood Napoleon's action to be conditional upon
Britain's revocation of certain orders in council.

With his eyes open, Madison decided to take the biggest gamble of his
political life and presume that Napoleon intended to revoke his decrees
before his precondition had been met. With questionable haste, Madison
issued a proclamation in November stopping trade with Britain within
three months if it had not canceled its orders in council. Britain
refused to do so pending evidence that Napoleon had repealed his
decrees. Since Madison could not prove Napoleon had acted, Britain
refused to alter its measures. Bitter and embarrassed, Madison
nevertheless encouraged Congress to renew nonintercourse against
Britain, which Congress voted to do in March 1811.

Through Napoleon's shrewd diplomatic tactic and through
Madison's untimely willingness to gamble, the United States once
again became a reluctant partner in strengthening the continental
system. The results of this episode, and the bitterness engendered by
it, helped to pave the way for the War of 1812, for many Americans
believed Britain had been inflexible and petty when there had been a
chance to be constructive and conciliatory. Britain, angry because the
United States seemed willing to help an aggressive conqueror such as
Napoleon, found American actions to assist Napoleon further evidence of
the Madison administration's fundamental ill will toward Britain.

It seems fair to say that the continental system, as manipulated by
Bonaparte, played a crucial role in bringing about the War of 1812. The
acts committed by Napoleon under the mantle of the continental system
were serious enough to have provoked war with the United States; indeed,
between 1806 and 1812, France and its allies had seized over four
hundred American ships. But after considerable reflection, Madison and
the Congress backed away from declaring war on France, believing Britain
to be enemy enough.

The whole complex of maritime belligerent measures, of which the
continental system was the centerpiece, had significant consequences for
the United States other than the War of 1812. Because of trade
interruptions of varying length, the enormous American carrying trade
was hurt, as were American hopes to nourish a promising trade with Latin
America and possibly East Asia. Also, domestic objections to Jefferson
and Madison's seemingly pro-French policies were sizable and
significant enough to provoke New England's Hartford Convention
of 1814–1815, though reforms requested by the twenty-six
delegates were moderate in tone. Aggressive federal enforcement of trade
measures in the ports and states raised questions about the Republican
Party's commitment to the primacy of local governance. On the
positive side, some argue that American exclusion from continental
markets proved to be a healthy stimulus to American invention and to
manufacturing enterprises even though other sectors of the economy
suffered unduly.

America's struggle with both French and British economic measures
had a decided effect upon Republican concepts of political economy. The
older ideals of full employment producing an industrious and virtuous
citizenry could not be guaranteed by increasing foreign markets; other
powers had the ability and will to close markets or restrict the
American carrying trade. Gradually, Republicans became better disposed
toward major manufacturing enterprise as a way to produce full
employment and a balanced economy. Also, developing the American market
itself became an attractive alternative to relying upon overseas markets
controlled by Europeans. With the vast Louisiana Purchase territory
waiting to be settled, Americans turned away from Europe and focused on
other endeavors, an option not available to them since 1775.

Imposition of the continental system demonstrated the cruel situation in
which small, neutral powers are placed when great belligerent powers
determine to direct neutral resources to their enemies only upon
disadvantageous terms or not at all. Jefferson and Madison's
unsuccessful attempts to bluff or to pressure France and Britain
underlined that truism of statecraft. Also, the experiences with
Napoleon and the continental system reinforced the American belief that
Europe remained the home of politically and morally corrupt politicians.
George Washington's farewell advice on avoiding unnecessary
entanglements with foreign powers received added emphasis through
American experiences with Napoleon's economic system and
Britain's cynical manipulation of American trade.

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